India’s economic prospects are shining bright, attracting global investors eager to capitalize on the country’s immense growth potential. With a population of nearly 1.5 billion, and over half under the age of 30, India boasts a burgeoning middle class fueling strong consumption trends. The International Monetary Fund expects India’s real gross domestic product (GDP) to expand by 6.5% in 2024. “When we look at the [variables] driving GDP, this crosses all levels of the economy, all areas and all sectors and you’re checking all boxes, which leaves for bright prospects for earnings growth,” said Malcolm Dorson, senior portfolio manager of the India Active exchange traded fund (ETF) at Global X. However, tapping into these opportunities as a foreign investor is not as straightforward as buying shares listed on the Indian stock exchanges. Limits on foreign ownership, complex tax implications and corporate governance concerns create barriers. For investors looking to gain exposure to India’s promising market while minimizing some of the hassle, here are some of the best ways to do it: Exchange Traded Funds One of the simplest routes is through ETFs that specifically track indexes comprised of Indian stocks. Some of the largest and most liquid India ETFs available to investors include the $9 billion iShares MSCI India ETF , WisdomTree India Earnings Fund with $2.7 billion in assets, and the $808 million Franklin FTSE India ETF . However, investors should be aware of the risks in emerging markets like India. One way to mitigate these risks is through actively managed funds that can conduct thorough analyses of companies. The Adani Group allegations last year served as a reminder of the potential risks in emerging markets and the value of active fund managers who can conduct deep analysis on companies. Notably, during the first two months of 2023 when Adani shares plummeted, the benchmark MSCI India index fell around 8%, while a sector of predominantly active India…
2024-03-06 18:12:00
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